The announcement for converting Ordnance Factory Board (OFB) units into Government-owned corporate entities is the so-called its corporatisation.In other words, earlier it was the government agency.
OFB factories’ responsibilities for defence product research & development, materials management, production planning and control, supply management, project management, quality control, labour welfare, industrial safety, industrial relations, etc. were under the control of Ministry of Defence.
To the contrary, after the corporatisation, Government-owned organisations have been converted into different corporations.
Now onwards, each corporation will have different managements, administrators, and contributors.
The initiative has been triggered by the mission of self-reliant India- Atmanirbhar Bharat scheme. The corporatisation of OFB will contribute to making India self-dependent and competitive of its capability in the production of arms and ammunition.
Narendra Modi’s time to time steps, their implementations and promotion are some of the uniqe and steps happened in the revolutions of our history.
Although apprehensions also come up, every cloud has a silver lining. Thus, time, strategies, and collaboration are the factors used for maintenance.
Reasons for the Corporatisation
For the recovery of the Indian economy from the impact of a covid-19 pandemic, Narendra Modi announced the special economic package of Rs 20 lakh crore.
The package also includes the structural reforms in the defence sector in which the emphasis was on the corporatisation of OFB.
There had been going Indirect labour costs and supervision costs. But India wants to do its best to face two-front war.
Therefore, the military needs capacity to maintain the level of armies and resources according to the needs. For the utmost efficiency level in fighting against security challenges, no delay in production has been expected from the corporatisation of OFB.
The ordnance factories have the potential to meet National military hardware requirements. Therefore, five operating divisions of the 18 British ordnance factories were expected to become the national strategic assets.
Also, the corporatisation of OFB can contribute to the overall national power and earning. It is possible from the foreign exchange exporting.
Features of the Corporatisation of OFB
Corporatisation of OFB constitutes three pillars including the Management, the Shareholders, and the Board of Directors.
The government will be controlling the Management and the Board of Directors. And of course, the Department of Defence Production (DPP) would continue leading the Management pillar along with the support of professionals.
Besides, the Centre will support OFB corporatisation in case of any losses. It will also provide capital investment for the projects.
Conversely, messy workability: It has no fixed scales for the demands of the armed forces, no timelines, no arrangement for 30-40 years support, that is needed after the introduction of equipment, and underfunded order quantity.
Aims of the Corporatisation of OFB
There is a strategic necessity for India to be independent in defence-related products. So the corporatisation of OFB will help India to be the responsible sector for what, when, and how much of the types of equipment, costs, military weapons, and emerging contingencies.
Next, OFB corporatisation also aims to monitor the support and redeployment plans for employees. Meanwhile, it will keep an eye on the safeguarding of employees’ wages and retirement benefits.
Effects of the corporatisation of OFB
What are the effects of the corporatisation of OFB to notice?
Employees’ concerns for job security: As an individual first observe the benefits and drawbacks of any change occurred in the society, the employees of OFB factories are also finding their future in danger.
Therefore, on the governments’ hard stance, OFB workforce has started threatening the nationwide strike.
The employees are worried about their future. Even the strike by the trade unions is at the time of IAF’s state of high alert alongside the Line of Actual Control (LAC).
Reforms expected by the Corporatisation of OFB
The action of the Indian government has taken a significant step towards defence reforms. These include:
- Freedom for the reorganisation of the ordnance factories
- Improvement in accountability
- Operational freedom and flexibility for technology acquisition and other areas
- Efficiency in Ordnance Supplies that will come up with a higher turnover and overall profit
- Financial independence
- Better utilisation of the factories; Hence, the increase in productivity
- Flexibility and betterment in decision making procedure for its better functioning
- Freedom for building partnerships with private sectors and joint ventures
Drawbacks of the corporatisation of OFB
Every coin has two sides. As you have peeped into the body of OFB corporatisation, expectations from it, and current effects, you should also be aware of another face.
So, what are the non-digested aspects of the corporatisation of OFB?
- Lesser government control
- Unstable demand of Defence production
- Moreover, according to employees’ perception, OFB corporatisation is the first step towards privatisation. Thereby, it is likely to lead to the unemployment of many. However, there are proper strategies for safe redeployment with fair wages and retirement benefits, as mentioned in the aims of OFB corporatisation.
Conclusion on the analysis of the corporatisation of OFB
The corporatisation of OFB will turn the Government’s ordnance factories into more competitive and profit-earning organisations.
This initiative under the Atmanirbhar Bharat scheme will help in maintaining economic value, urgent needs of the Defence sector, and will aid India in a two-front war.
Its functioning body incorporates three pillars- the Management, the Shareholders, and the Board of Directors.
Indeed, It has inflamed employees’ anger on their thinking of an uncertain future, and thereby, they have provoked their co-partners for strikes.
What about your viewpoints for the betterment of OFB corporatisation?